Jeremy Hunt, the culture secretary, has confirmed that he is ditching a proposed new national TV network to provide a "spine" for a new generation of local services.

Publishing his final proposals for establishing a new generation of local TV services on Monday, Hunt said that instead he intended to provide bidders with digital terrestrial TV spectrum, to be allocated and managed by a new licensed multiplex company.

Hunt's Department for Culture, Media and Sport also said it planned to secure "appropriate prominence" for local TV services on electronic programme guides, "with high numbers on DTT [Freeview] and front page access on cable and satellite platforms".

The DCMS also confirmed as previously announced that £25m in local TV infrastructure costs will be met from the BBC licence fee, with a further £5m of licence fee money to be spent annually for three years on local content.

"The proposals include three statutory instruments: the first, to reserve sufficient local, low-cost spectrum for carrying the local TV services; the second to create a proportionate and targeted licensing regime for the spectrum and local TV service operators; and the third, to secure appropriate prominence for the licensed local services in television electronic programme guides," Hunt said in a written ministerial statement.

"Local TV will provide news and other content for local audiences helping to hold local institutions to account and providing proper local perspectives. This framework offers the right incentives to the market to develop innovative business models; provides greater certainty and reduced risk for investors; and encourages new market opportunities and growth," he added.

"It is expected the first local television licences will be awarded by Ofcom from summer 2012."

Ivan Lewis, the Labour shadow culture secretary, said the announcement had been "rushed out to deflect attention from Jeremy Hunt's discomfort at the News Corp/BSkyB debacle".

"We now know he has ditched the idea of a national TV spine and is still unable to provide satisfactory answers about the viability of local TV and whether it represents good value for money," Lewis added.

"In the period ahead I will be asking searching questions to ensure local TV is being developed in the public interest and is a good use of BBC licence fee payers' money."

The DCMS said a further update would be published in the summer giving an assessment of the potential number of local TV licences likely to be up for grabs.

EPG providers such as Freeview, Sky and Virgin Media will be required to give "appropriate prominence" to licensed local digital TV services, enforced through Ofcom statutory code, which will require secondary legislation.

However, the DCMS said local TV operators might come together to form a new network if it made commercial sense. It suggested bidders interested in pursuing this option should make their case to media regulator Ofcom in the contract applications.

The DCMS said amendments would be required to the Communications Act 2003 and Wireless Telegraphy Act 2006 to implement the new local TV framework.

After implementing the necessary secondary legislation, Ofcom will run a competition for a licence for a new multiplex company that will be awarded a package of 8MHz interleaved DTT spectrum.

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